The Union Budget for the fiscal year 2015-16 was presented by the Finance Minister on 28th February 2015. Apart from abolishing Wealth Tax Act, 1957 and officially warding off Direct Tax Code (‘DTC’), he also deferred the least liked GAAR (General Anti-Avoidance Rules) for two more years. He proposed to implement a roadmap for the reduction of corporate tax rate to 25% over a period of four years and also promised to phase out exemptions to give a fillip to the stagnant tax-base in India. Most of the direct tax proposals in the Finance Bill, 2015 are effective from the financial year commencing on 1 April 2015, unless otherwise specified. Click here to download an analysis of the key Direct Tax Proposals in the Budget
Monthly Archives: February 2015
GVK Industries Ltd vs. ITO (Supreme Court) The assessee paid fees to a non-resident (NRC). The obligation of the NRC was to: (i) Develop comprehensive financial model to tie-up the rupee and foreign currency loan requirements of the project.(ii) Assist expert credit agencies world-wide and obtain commercial bank support on the most competitive terms. (iii) Assist the appellant company in loan negotiations and documentation with the lenders. The assessee claimed that as the fees were paid for services rendered outside India, the same were not chargeable to tax in India and that the assessee was under no obligation to deduct TDS u/s 195. However, the AO and CIT rejected the claim of the assessee. The High Court (228 ITR 564) held that the said payment was not assessable u/s 9(1)(i) but that it was assessable u/s 9(1)(vii). The assessee claimed that s. 9(1)(vii) was constitutionally invalid as it taxed extra-territorial transactions. However, this claim was rejected by the Constitution Bench of the Supreme Court in 332 ITR 130. On merits, the matter was remanded to the Division Bench of the Supreme Court. HELD by the Division Bench dismissing the appeal:
Expression “fees for technical services” in s. 9(1)(vii) explained with reference to “consultancy” services – ...
Ms.Prema Gopal Rao v DCIT (I.T.A. No.8653/Mum/2011 dated 07.01.2015) Mumbai ITAT Background: The assessee filed original return of income on 10.09.2004 declaring total income of Rs.12,16,600/-, which included Long Term Capital Gain on sale of Shares of Rs.3,60,305. The case was selected for scrutiny vide issue of notice u/s 143(2). After the receipt of the said notice, the assessee filed revised return of income, wherein the assessee revised the Long term Capital gains upwards to Rs.14,87,789/-. The AO completed the assessment as per the Revised return of income by making certain disallowances. In the penalty proceedings, the AO took the view that the assessee has revised the return of income only after the enquiry was initiated by him and accordingly, levied penalty on the upward adjustment of long term capital gains. CIT(A) also confirmed the penalty on the reasoning that filing of revised return of income was not voluntary, since it was filed after selection of the original return of income for scrutiny.
No penalty even if the return is revised after issue of notice u/s 143(2) wherein ...
Garware Chemicals Ltd. v DCIT (IT APPEAL NO. 7819 (MUM.) OF 2010 dated 21.01.2015) Mumbai ITAT Background: The assessee is engaged in the business of manufacturing of various Petro Chemical products. During the assessment proceedings, the Assessing Officer noted that the assessee has claimed the deduction of Rs. 14 crore u/s 43B of Income Tax Act. The AO found that the claim of the assessee u/s 43B was in connection with the discharge of interest amount payable to IDBI amounting to Rs. 14 crore by way of conversion of the same into equity shares of the assessee company. The AO held that in view of the Explanation 3C of section 43B, the claim of the assessee is not allowable and accordingly rejected. The CIT(A) also did not accept the contention of the assessee and confirmed the disallowance made by Assessing Officer by following the decision of this Tribunal in the case of SRF Ltd. v. DCIT (34 SOT 1).
Allotment of equity shares in lieu of interest liability is a mode of payment allowable ...
Kancast Pvt. Ltd v ITO (ITA No.1265/PN/2011 dated 19.01.2015) – Pune ITAT Background: The assessee transferred factory land, building and shed for a consideration of Rs.3,12,04,000/- for land and building and Rs.47,96,000/- for other fixed assets. Out of the consideration of Rs 3,12,04,000 for land and building, amount of Rs 77,00,000 pertained to leasehold rights in land. The Assessing Officer noted that the value of land and building adopted by the registering authority for the purposes of stamp duty valuation under section 50C for the purpose of computing capital gains based on the Ready Reckoner rates of the State Government was Rs.5,75,93,000/-. The assessee contended that section 50C of the Act was not applicable as the assessee was only holding leasehold rights in the land and was not owner of the land. However, the Assessing Officer considered the stamp duty value of the consideration for land under section 50C at Rs.4,98,93,000/- (Rs.5,75,93,000/- minus Rs.77,00,000/-). In the first level appellate proceedings, the assessee reiterated that it did not transfer any land because it was not owning the land and therefore transfer of leasehold rights in land did not invite the provisions of section 50C of the Act. Reliance was placed on the ruling of Mumbai ITAT in the case of Atul G. Puranik vs. ITO vide ITA No.3051/Mum/2011 dated 13.05.2011. The CIT(A) dismissed the submission of the assessee and held that the Explanation below section 269UA(d)(i) of the Act makes it clear that the land, building, etc. included in the phrase ‘immovable property’ also includes any rights therein. Therefore, he upheld that the order of Assessing Officer was justified in applying the provisions of section 50C.